What’s the Future of the Agency Model in the Programmatic Era?

Sean Larkin

The Drum

August 2, 2017

What is the agency model of the future?

The above is arguably the key question facing the media business since the dawn of automated media buying technologies. With the K2 transparency report from the Association of National Advertisers (ANA) raising the question over whether or not more advertisers will bring media buying in-house, the future has never been more at risk.

With talk of agency trading desks being used a cash cow by their holding groups, plus marketing teams coming under increased pressure from their procurement departments, proving ROI from media budgets is now a must, and this is making life harder for media agencies.

Additionally, as access to advertising inventory becomes increasingly diluted (since the advent of the various iterations of ad networks) the traditional negotiating power of the ‘bulk buying media agency’ has also declined.

This is not to say the role of the media agency is now redundant, and agency groups have responded in a number of different ways, with the Publicis Media setup (a move which saw the effective disbandment of its Vivaki and AoD units) and WPP's mPlatform largely seen as emblematic of this trend.

This topic of debate informed a panel session hosted by The Drum to mark the launch of this year’s Digital Trading Awards, with participants from IBM’s media team, Hulu, Media iQ and PulsePoint all on hand to share their distinct view on the trend (see image below).

IBM’s use of its artificial intelligence (AI) platform Watson to help improve the efficiency of its automated media buys is well documented. Subsequently earlier this year it ran an RFP to further hone these efficiencies, which saw it begin to work with GroupM (earlier it had worked with its WPP stablemate Neo@Ogilvy).

Brian Stoller, IBM director for paid media, told attendees how this move effectively represents ‘Big Blue’s’ desire to operate a “hybrid model” that would see it in-house certain capabilities, but work with its media agency as “a guide.”

These moves formed part of a roadmap that’s been executed over several years where IBM will use its own technology – were appropriate – and the agency can then vet and negotiate deals with third party technology vendors.

At present this involves reviewing where it sources its online advertising inventory, with the industry giant working with its agency partner to vet ad networks, plus the accuracy of its third party measurement and attribution providers.

One measure of the need to perform such a cull, and alter how it worked with its agency partners, was the fact that “blacklists aren’t working for us”, Stoller told the attendant crowd.

He went on to relay an instance of how it used a blacklist to prevent some its Watson ads appearing on Breitbart, only to find that within 24 hours, its ads were again appearing on the controversial rightwing website. Simply put, it “was like playing whack-a-mole” added Stoller.

Pixabay

Panel moderator Wayne Blodwell, chief executive of The Programmatic Advisory, and previously head of programmatic at Dentsu Aegis in the UK, also added his observation that despite the unprecedented sea change, one constancy is that agencies continue to play their traditional role of external advisor with a ‘big picture’ prospective.

Speaking about why IBM brought certain elements of its advertising operations in-house, IBM’s Stoller added that improving the brand’s time-to-market, ie cutting the time between creative brainstorm sessions, and the ideas appearing in front of the relevant audience, was key.

Getting back to humans talking to humans

Fellow panelist Joe Kowan, Media iQ, executive vice president of product & strategy, offered the observation that as long as a media agency can legitimately lay claim to being a neutral arbiter of media opportunities, plus the quality of data used to form insights, then their role has never been more relevant.

Getting back to situation were “humans talk to humans” and they then use the available toolsets to improve transparency, such as ads.txt and blockchain, is the ideal, according to Kowan. It makes sense for brands to bring certain components in-house, particularly those like IBM with data in its DNA, but issues such as strategy and execution are still largely the domain of the agency, he added.

The rise of the tech-savvy marketer

Fellow panelist Francois de Laigue, PulsePoint, vice president of product operations, said the increased tech-savviness of those on the brand side, as evidenced by Procter & Gamble’s $100m-plus digital advertising cull, was emblematic of the increased prominence of adtech within the wider industry ecosystem.

Echoing Stoller’s earlier point, Doug Fleming, Hulu, head of advanced TV, used the forum to share his view that the increased scrutiny has also led publishers to question what kinds of inventory partners they work with, and that’s a trend that premium content owners are now benefitting from.

When discussing issues such as click fraud, plus questionable viewability rates, he told those present: “All of those things sound terrible… I have a solution for you: we are fraud-free; our inventory does not deploy into [murky] exchanges [an issue that has been addressed this year via a number of industry-wide initiatives].”

This means dealing more directly with the inventory source, as opposed to murky third parties, according to Fleming, who added that Hulu's approach helped ensure that its fraud problem was “negligible”, and that it guaranteed advertisers a 100% view completion rate.